Cap and Trade: The Best Way Forward for Texas?

By Susan Combs
Texas Comptroller of Public Accounts

As Texans swelter this summer, we are turning up our air conditioning
and hitting the road for vacation. These seasonal routines — as well
as many aspects of daily life — would become more expensive because
of proposals pending in Washington.

The cap and trade provisions of the American Clean Energy and Security
Act of 2009 will have a significant impact on Texas families, businesses
and consumers.

The legislation would cap emissions and allow companies to buy and sell
their rights to emit carbon dioxide. The concept is that industries would
reduce emissions over time as the government lowered the cap and it became
too expensive for companies to continue to buy allowances to emit carbon
dioxide.

I am worried about the disproportionate impact on the Texas economy.

Texas has the nation’s second largest population and a high concentration
of energy-intensive industries producing products used around the world.
These and other factors, such as our climate, make Texas one of the country’s
leading energy users.

The proposal to regulate greenhouse gas emissions will weigh far more
on Texas than other regions. Costs will increase for energy-intensive
industries such as aluminum, chemicals, forest products, glass manufacturing
and petroleum refining, among others. Houston, the corporate home to more
energy companies than anywhere else in the world, could be especially hard
hit.

Many studies of the legislation show decreased employment and increased
energy prices. My office’s initial look at the cap and trade provisions
of the bill concluded that Texas could lose 135,000 to 277,000 jobs in
2012. Those losses could increase up to 400,000 by the year 2030.

The impact would fall disproportionately on Texas but the legislation’s
impact will be felt nationwide as higher costs are passed to every sector
of the economy.

Texans will pay more to fuel their vehicles, cool their homes and purchase
everyday goods. Our office estimates that as a result of the cap and trade
provisions of current legislation, the typical Texas household might spend
up to $1,100 a year more on goods and services. This includes ordinary
items such as diapers, cell phones, aspirin and lipstick.

Texas has been blessed. Our diverse economy has helped the state weather
the recession. But, as Texans look to the future, we must employ all of
our resources to sustain our prosperity and global economic competitiveness
as we address environmental concerns.

Our experience with a diverse energy industry can help achieve environmental
goals with innovation instead of burdening vital industries with too much
regulation.

A leader in oil and gas production, Texas is already enhancing its renewable
energy potential and making its industries even more efficient.

Just this month, the Pew Charitable Trusts identified Texas as a leader
in creating clean energy jobs. Employment in the emerging field has grown
15.5 percent in the past decade.

Texas is the nation’s leader in wind energy, with almost three times
the megawatts of the next closest state, Iowa. New transmission lines under
construction will increase our wind energy capacity to more than 18,000
megawatts.

Texas also has enormous potential to develop solar, nuclear, biomass and
other alternative sources of energy. And to stay competitive, Texas businesses
are constantly finding ways to be more energy efficient.

As a result, our economy’s energy intensity — a measure of
how much energy is used per unit of output — fell by almost 68 percent
between 1970 and 2005.

Congress should stop its rush to pass this legislation without ensuring that
its burdens and benefits will flow fairly to everyone. A clean environment
is everyone’s goal, but it is rational and appropriate to look at the
costs.